CCI approved the acquisition of 26% stake in State Bank of India Payment Services Private Limited by Hitachi Payment Services Private Limited

On December 19, 2018, pursuant to a joint venture agreement signed on October 27, 2018, CCI approved the acquisition of 26% of issued equity share capital of State Bank of India Payment Services Private Limited (‘SBIPSPL’) by Hitachi Payment Services Private Limited (‘HPY’) (collectively referred to as ‘Parties’).  The remaining 74% of the equity share capital was to be held by State Bank of India (‘SBI’). [1]

HPY, an Indian entity, is a wholly owned subsidiary of Hitachi Limited (‘Hitachi’). Hitachi, directly or indirectly, is engaged in various industries, including information and telecommunications systems, financial services, urban development, power systems, transportation, electronic systems and equipment, construction machinery, and automotive systems. HPY provides services including: (i) ATM Services; (ii) sale of cash recycling machines; (iii) Card Issuance Solutions; and (iv) the provision of Point of Sale services (‘PoS’) along with certain ancillary services such as hardware maintenance and merchant support services (‘Payment Processing and Outsourced Services’). SBIPSPL is engaged in the Merchant Acquiring Business (‘MAB’).  The provision of MAB include identification and acquisition of merchants for Relevant Payment Devices (‘Merchant Acquisition’) and provision of transaction processing services (‘Transaction Processing Services’) to enable merchants to accept payment.

CCI observed that the Parties were not engaged in overlapping activities but were rather providing services that are regarded as complementary in nature. In its competition assessment, CCI examined market for Merchant Acquisition and Transaction Processing Services. In the Merchant Acquisition Market, SBI (parent of SBIPSPL) was found to be the market leader with a market share of 10%-20%. However, it faced competitive constraint from other players in the market with similar market shares such as Ratnakar Bank, Axis Bank, HDFC Bank and ICICI Bank. CCI, in the market for Transaction Processing Services, considered the market shares in narrower market (limiting to PoS Terminals) and HPY’s market share was found between 20%-30%. It was noted that HPY faced competitive constraints from comparable players in the market such as Worldline, HDFC and First Data. In light of the above, CCI approved the combination as it was unlikely to have any AAEC in India.

[1]  Combination Registration No. C-2018/11/617